STAGFLATION

Stagflation is a complex economic phenomenon characterized by a simultaneous occurrence of inflation, slow economic growth, and high unemployment.

This combination is often triggered by rising commodity prices, particularly oil, which increases costs for businesses and consumers, leading to reduced spending and lower productivity. Policymakers face a difficult choice between combating inflation through higher interest rates, which can worsen unemployment, or stimulating the economy through increased spending, which can exacerbate inflation.

While stagflation was a major concern in 2022, recent economic indicators suggest that the US economy is not currently experiencing stagflation. However, investors should remain vigilant and diversify their portfolios to mitigate potential risks associated with this economic condition.